Social Landlord Service: HRA Income Policy

The Regulator of Social Housing Policy Statement outlines how social landlords can set the rents. The `Rent Standard' introduced in April 2020 allows for rent increases not exceeding the Consumer Price Index (CPI), which is determined annually in September plus an additional 1%. (Rent Standard and guidance - GOV.UK (www.gov.uk))

In 2022/23 due to high levels of inflation the government imposed a cap on social landlords to limit the annual rent increase for 2023/24 to a maximum of 7%. The HRA was already facing increasing pressures and the cap along with the impact of rising inflation along with increased construction material costs and interest rates has created additional challenges for social landlords.

The cost-of-living crisis during 2022/23-24 following the COVID-19 pandemic added additional pressures on our tenants. They faced increased utility costs, higher food costs and potentially mounting debts leading to arrears.

The Governments welfare reforms implemented through the Welfare Reform and Work Act 2016, and the rollout of Universal Credit (UC) has simplified the benefit system replacing legacy benefits for existing claimants. UC aims to assist those on low incomes, unemployed individuals or those who cannot work. However, it has significantly impacted rent income collection.

UC claimants are expected to manage their own rent payments and as UC is paid monthly in arrears, this often results in delays in rent payment. These tenants tend to accumulate higher arrears on average compared to those on other benefits or those not receiving any benefits.

In 2015, the Government announced a 1% rent reduction for general needs tenants starting from the financial year 2016-2017, with an additional 1% decrease annually until 2020. This decision significantly affected the HRA business plan, leading to a reduction in income available to invest in the housing stock and SL Services.